Jump to content
House Price Crash Forum
Sign in to follow this  

Gmac Posts $2.48 Billion Loss On Big Write Downs

Recommended Posts


NEW YORK (Reuters) - Finance company GMAC posted a $2.48 billion second-quarter loss on Thursday, as rising gas prices forced write-downs of truck and sport-utility vehicle leases, and losses in its mortgage lending unit soared.

"A soft economic environment and continued volatility in the mortgage and credit markets have significantly affected results," Chief Executive Alvaro de Molina said. "Higher fuel prices and weaker consumer credit prove to be headwinds."

GMAC's loss compared with a profit of $293 million a year earlier. Its Residential Capital LLC mortgage unit lost $1.86 billion, its seventh straight unprofitable quarter, after losing $254 million a year earlier. Auto finance operations lost $717 million, compared with a year-earlier $395 million profit.

Results will hurt those of General Motors Corp <GM.N>, which kept a 49 percent stake in GMAC after selling the rest in 2006 to private equity firm Cerberus Capital Management LP <CBS.UL>.

GM is scheduled to report quarterly results on Friday. Its shares fell 57 cents to $10.83 in pre-market trading.

GMAC is based in Detroit, and ResCap in Minneapolis.

Results at GMAC included a $716 million write-down of vehicle leases, reflecting lower demand for and prices of used SUVs and trucks in the United States and Canada.

GMAC said it ended June with about $18 billion of SUV and truck leases in those countries on its books, out of a total $32.8 billion of leases.

In typical leasing transactions, automakers or lenders retain ownership of vehicles that customers rent, often for two to five years. But record gas prices have driven consumers to more fuel-efficient vehicles, forcing lenders to write down the value of leases on these once-popular vehicles.

GMAC this week said it stopped offering leasing incentives in Canada, and is increasing pricing on other lending.

Cerberus certainly know how to buy well, owning Chrysler and GMAC. Smart move I wish I had their business brain....

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 401 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.